Hacker News Reader

Comment by ajross | Hacker News Reader

> As a depressed farm economy continues to roll on

Interestingly this is one of those things that gets spun as bad no matter which side of the argument you find yourself on. The effect here is deflation in food prices.

Here's a story from Feburary talking about the effect, but not making the connection: https://www.reuters.com/markets/commodities/us-farm-income-s...

There was a HUGE SPIKE in farm income in 2021-22 to the tune of like 60% owing to the pandemic effects on prices (mostly due to transport and not agriculture per se, as I understand it). It was level in 2023 and is now crashing back to something approximating a baseline level.

Everyone complained like crazy about this and we had all those doomsday articles about inflation. Now it's reversing, and... it's still bad. Economics discussion can't win, pessimism rules.

As far as John Deere, it just looks to me like they staffed up too hard over the boom and are having to correct.

View on HN

It's not necessary that lower farm income results in lower prices at the supermarket. For instance, the price of a chicken at the chicken farm is completely disconnected from the price of a chicken at the supermarket by the Tyson/JBS monopoly.

Food distribution is currently consolidating and rolling-up rapidly (ex: the Albertsons/Kroger merger). The result will be low farm income and high supermarket prices.

It's clearly not "completely" disconnected, otherwise there would be zero volatility in supermarket prices. But again a price is a price not matter what layer of the market it sits at, and all prices are subject to market conditions. Freaking out about some subsampling of them as being "real" in/de/stag/whateverflation in an attempt to shoehorn whatever noisy data you have into a signal that confirms your priors just leads to the kind of nonsense logic that produced the analysis I quoted above.

> It's clearly not "completely" disconnected, otherwise there would be zero volatility in supermarket prices.

I understood that supermarkets are always changing prices semirandomly, so that consumers never really know what the price "should" be.

> I *misunderstood

> ... and we had all those doomsday articles about inflation. Now it's reversing, and... it's still bad. Economics discussion can't win, pessimism rules.

The US did grow its public debt by 50%, from 22 trillion to 34 trillion in... Four years. +12 trillion in... Four. Years.

The cost of servicing the US debt is going to be the most important government spending two years from now.

US debt has to be something like 135% of the GDP now (roughly 100% public and 35% foreign).

Care to share some of your optimism on these issues?

This has absolutely nothing to do with inflation arguments. But I'll engage anyway. Federal debt service costs as a percentage of GDP over time: https://fred.stlouisfed.org/series/FYOIGDA188S

There was indeed a very large increase in 2020-21 due to pandemic assistance programs. But the actual cost of the debt remains about half of what it was in the mid-80's under the Reagan economy (where the absolute size of the debt was smaller but the interest rates required to service it were higher).

I think we came out of the 80's just fine. We'll survive this too.

The other huge spike was in nitrogen-based fertilizer that went up something like 3x ($0.40/lb -> $1.20/lb) during the pandemic

Reply on news.ycombinator.com